Applying for a mortgage can be an exciting, but yet daunting task. The excitement of finding a new home or an investment property that you want to purchase and the fear of not meeting the requirements to qualify can definitely keep you up at night. With the rate of many mortgages at an all-time low, you may be thinking of upgrading your home or investing your savings into property. The best way to ensure that your mortgage application is approved, is by being well prepared for it.
The tips below will help you get prepared for your mortgage applications.
1. Favorable Credit Report
The first thing that lenders look out for before considering approving mortgages is your credit report. It is crucial that you have a favorable credit report that is accurate and shows your credit worthiness. Without a good credit report, it will be difficult to get approved. In view of this, start preparing to put your credit scores in order before applying for a mortgage.
2. Monitor Your Credit Report
Keep an eye on your credit report. If there are discrepancies in the report across the three relevant credit bureaus, dispute the inaccuracies and ensure that the records are put in order. Monitor your debt-to-credit ratio to keep it as low as possible. If you notice transactions or accounts that are not yours in the report, investigate them immediately and ensure that they are expunged from the report.
3. Research Mortgages and Lenders
The next step that is crucial to your mortgage approval is to find out about the best rates available. Research mortgages, rates, lenders, and brokers around you before you commit to anything. Find the best rates and read up the relevant terms. Based on your findings, you will discover what you can afford in terms of down payment and rates.
4. Find the Best Way to Finance the Mortgage
With different brokers and lenders available, it will be best to decide how you will finance the mortgage before committing to it. You must evaluate your financial condition when buying a home and decide how best to finance it without aggravating your condition. You may choose between a 15-year mortgage and 30-years mortgage, as well as choose between fixed and variable rates.
You should know the pros and cons of both fixed and variable rate mortgages before you choose which of best suits your situation.
5. Down Payment Amount
One significant way to prepare for mortgage approval is to be realistic with how which you can afford as a down payment. If you have a large down payment, you will find that you have more options to choose from and chances are you will be approved by more lenders. The down payment amount is considered by every mortgage lender. It would definitely assist the approval process if you were able to save a larger sum for your down payment.
The tips addressed above are meant to help you prepare for your mortgage approval. However, every lender has different criteria which the review every application against, if you are not approved by the first lender you applied with, do not get discourage as there are plenty of lenders that can provide you with a great rate for your mortgage.
Partner with an experienced mortgage broker, as they have the industry knowledge and the understanding of multiple lenders approval process to get you the best rate possible and ensure your new home or investment property is properly financed.